OM Group hammers out better SE offer

By Simon English

12:00AM BST 09 Oct 2000

OM GROUP is in talks with bankers and shareholders in an attempt to hammer out the terms of an improved offer for the London Stock Exchange.

The Swedish group has completed its charm offensive on Exchange shareholders and claims to have won the "rational and strategy arguments". OM insiders admit it needs to find more cash if its bid for the LSE is to have any chance of success. Recent falls in its share price bring the credibility of the offer into question.

It is offering 0.65 new shares plus £7 in cash, which now values the Exchange at £750m, or £25 a share. OM shares closed on Friday at Skr394 (£27.77), down from a high of Skr498. Exchange shares stand at £29.50.

Exchange shareholders say they have been impressed by OM's technology and management but would need an offer worth £40 a share to be fully persuaded. OM is understood to regard this as somewhat expensive. One insider said: "It has to be a commercial deal."

The improved bid is likely to come the week after next. On Tuesday OM reveals third-quarter profits, which will be carefully scrutinised by the City. Reports from Sweden claim police are considering re-opening investigations into bribery allegations against OM's chairman and founder, Olof Stenhammar.

Mr Stenhammar was investigated for an alleged attempt to bribe the International Olympic Committee when working on a bid to bring the 2004 games to Stockholm. This week the Exchange will produce its third and final defence document to OM's bid.

Options under consideration include selling the Stock Exchange tower and investing the money, an estimated £100m, in marketing and technology. At the weekend the Exchange's chairman, Don Cruickshank, gave the first hints to where the future lies by announcing plans to launch a European market for growth companies.